This post is the second in a series of posts that offer suggestions for protecting one’s estate plan from the unprincipled behavior of trustees, family members and other perpetrators, in order to ensure that the estate plan will be implemented as intended.
Financial exploitation of elder adults is an epidemic in our society. One form this abuse can take is “undue influence,” which occurs when the perpetrator causes a vulnerable elder adult to change his or her estate plan in a way that benefits the perpetrator and is contrary to what the elder adult really wants. Regrettably, financial elder abuse – including undue influence – often occurs at the hands of family members.
One rarely-used technique to protect one’s estate plan from undue influence is to include a restrictive amendment provision in one’s revocable trust.
Simply holding assets in a revocable trust can provide modest protection against undue influence. A revocable trust can be amended only in the manner that the trust itself prescribes, unlike a will, which can be revoked and amended by simply signing a new will. Thus, the ultimate disposition of property that is held in a revocable trust can be altered only in the manner required by the trust. Unless the perpetrator is familiar with the victim’s financial affairs, the perpetrator is not likely to know that the victim even has a revocable trust. And unless the perpetrator is knowledgeable about estate planning, he or she is not likely to realize that the revocable trust needs to be amended and is not likely to know how to do it. In this way, having a revocable trust can help protect against undue influence.
But it may be advisable to go a step further. Restricting one’s ability to amend one’s own revocable trust can be a very effective way to protect one’s estate plan from undue influence. The trust provision could say something along the lines of the following:
“Any amendment to this trust shall be effective only if it is delivered to [insert name of trusted family member, friend or professional advisor] within five calendar days of its execution.”
Such a provision provides protection in three ways. First, the perpetrator is not likely to know that the delivery requirement exists. Second, even if the perpetrator is aware of the requirement, he is not likely to comply with it because doing so would reveal his nefarious plans. And third, if the perpetrator does deliver the amendment to the designated individual, the recipient can then take appropriate action, such as contacting the elder adult, the elder adult’s attorney or Adult Protective Services.
The restrictive amendment provision will need to be customized to suit each client’s particular situation, but the basis concept should be evident.
One potential danger of using a restrictive amendment provision is that it may be overlooked when the client wants to make a legitimate change to the trust, with the result that the amendment will be invalid. Such a restrictive provision should be used, therefore, only in exceptional circumstances. It is appropriate only where the client is genuinely concerned that he or she may be subjected to undue influence.
For a more detailed discussion of revocable living trusts in Utah, go to “Basic Estate Planning Information” on the home page of this website and see other blog posts on Utah revocable living trusts on this site.
Rust Tippett is the author of this blog post.
Copyright 2014 UNLEPI, LLC, a Utah limited liability company. All Rights Reserved.
This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, LLC. The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.